U.S. stock market moves sharply higher

View full sizeThe Associated PressTraders work on the floor of the New York Stock Exchange

NEW YORK — Good news about hiring and retail sales helped send the U.S. stock market sharply higher Thursday.

For
investors, the pair of government reports offered more encouragement
that the U.S. economic recovery will continue, even as Europe and Japan
struggle. The Standard & Poor's 500 index gained 23.84 points, or
1.5 percent, to 1,636.36.

The gains were broad. All 10 industry
groups within the S&P 500 rose, led by retailers and other
consumer-discretionary companies. Gannet soared 34 percent, the most in
the S&P 500, on news that it would buy another media company, Belo.

"The
underlying fundamentals of our economy are clearly doing much better,"
said Brad McMillan, chief investment officer for Commonwealth Financial
in Waltham, Mass.

Markets have turned turbulent over the past
three weeks. The S&P 500 climbed 17 percent from the start of the
year and hit an all-time on May 21. The index began sliding the next day
when the Federal Reserve said it would consider pulling back its
support for the economy this year.

It's been a bumpy ride lower.
The index has been as high as 1,669 and as low as 1,608 over the past
three weeks, a wide trading range of 3.6 percent.

Investors have
been debating when the Fed will begin slowing its bond purchases, and
they've been worrying about the results. They could get a better sense
next Wednesday, when the bank releases its policy statement and Fed
Chairman Ben Bernanke holds another press conference.

"A lot of
investors are worried about the Fed," said Bob Baur, chief global
economist at Principal Global Investors in Des Moines, Iowa. "That's
going to create a bumpy market at least until they get some clarity on
that. But we really think the U.S. is in pretty good shape."

Baur
thinks the U.S. economic recovery will pick up speed later this year,
which could help push corporate earnings and the stock market higher.

The
latest positive news came early Thursday when the government said the
number of Americans seeking unemployment benefits fell to 334,000, below
what economists had expected. Jim O'Sullivan, chief U.S. economist at
High Frequency Economics, wrote in a note to clients that the
government's weekly numbers, while volatile, "continue to signal an
improving labor market."

The government also reported that U.S.
retail sales increased 0.6 percent in May from April. That's up from a
0.1 percent gain in April and the fastest pace since February.

Some investors, like Anton Bayer, CEO of Up Capital
Management in Granite Bay, Calif., believe that financial markets will
falter when the Fed and other central banks pump less money into the
system. The Fed has artificially propped up the economy, he thinks,
which is why investors are nervous about what will happen when the
central bank starts buying fewer bonds every month.

"What the
markets are seeing is the economic engines are not being primed," Bayer
said. "The fear is of the stimulus going away and exposing an economy
that is not really chugging along. It's the big risk."

In the U.S.
government bond market, the yield on the 10-year Treasury note dropped
to 2.14 percent from 2.23 percent late Wednesday.

In Japan, the
benchmark Nikkei 225 index slumped 6.4 percent as doubts grew that Prime
Minister Shinzo Abe's economic turnaround plan will succeed. The
Japanese market is down 20 percent from a recent high reached May 22,
the definition of a bear market.

That decline followed an
extraordinary surge from mid-November to late May, when the Nikkei
soared 80 percent as investors hoped Japan would finally emerge from its
two-decade economic slump.

The price of crude oil rose 13 cents to $96.01 a barrel in New York. Gold dropped $13.70 to $1,378.30 an ounce.

Among stocks making big moves:

—
Safeway jumped $1.71, or 7 percent, to $24.82 after the company said
late Wednesday that it would sell its supermarket business in Canada to
food retailer Sobeys for $5.7 billion.

— Gannett soared $6.75 to $26.60 after announcing its deal to buy Belo for $1.5 billion.